When you buy a home, the necessary paperwork for a mortgage application and underwriting can often seem overwhelming. Having a mortgage loan closing documents checklist can help make this process easier and help ensure you have everything ready before it is needed.
Here, we provide all the typical loan information necessary for your application and home closing.
Loan application information
When applying for a home mortgage and going through underwriting, your mortgage lender will need to take a deep dive into your personal and financial life. Unfortunately, this is necessary to help ensure you meet all the necessary loan requirements and guidelines and that you are in the position to afford your monthly mortgage payments. Knowing what information may be required in advance allows you to make sure you have all the necessary paperwork you may need ahead of time to help speed up the process and get you into your new home sooner.
To begin with, you will need to provide personal identifying information. This will include photo IDs and social security cards for every person on the mortgage. You may also need to provide information regarding your marital status and the number of children you have, as well as their personal information.
If you are not a U.S. citizen, you may need to provide proof of permanent residence and immigration status. It can include a copy of your green card, employment authorization documentation, or your approved visa.
Employment and income history
In order to prove that you can make your monthly mortgage payments and afford the amount of your home loan, the lender is going to require documents that confirm your employment and income history. This can include pay stubs from your employer for at least the last 30 days, W-2 forms from the last one to two years, and your income tax returns for the last two to three years.
If you are self-employed, most lenders require at least two years of a steady income in the same self-employment industry. Proof of this can come from client contracts or letters from your current clients. If you own a business, you will need to provide your business license and proof of insurance, as well as at least two years of tax returns, both personal and business.
Profit and loss statements
If you own a business, in addition to the information listed above, you will also need to provide a cash-flow analysis and a year-to-date profit and loss statement verified by a certified accountant.
Your lender will want to ensure that you have the assets available to cover your down payment and closing costs, as well as maintain cash reserves if they are required. To show this, you will need to submit bank statements for at least two to three months.
Investment account statements
If you plan to use money from an investment or retirement account to cover your down payment or closing costs, you will need to provide statements from all these possible accounts. This can include retirement accounts, 401(k) plans, stocks, and certificates of deposit.
If a family member is gifting you the money for your down payment, you will need to acquire a gift form and letter ensuring that this money is a gift and not a loan that is expected to be paid back.
Assets and liabilities
Lenders will need to calculate your debt-to-income ratio to ensure that you have the financial ability to make your monthly mortgage payments. To do this, you will need to provide your bank investment account statements and proof of all debts, such as auto or student loans, credit cards, personal loans, and any other regular expenses.
The lender will need to check your credit history, though you are not required to run and submit your own credit report. Instead, your mortgage lender will ask for your permission to run a credit check. If you have a thin credit history, they may ask for alternative credit data, such as utility bills, rent history, cable bills, and more.
Some lenders will require you to provide a rental history to show proof of regular monthly housing payments. This can include a list and contact information of your landlords over the last two years.
Signed sales contract
You will need to provide a signed copy of the sales agreement between you and the seller. It is the document that shows the purchase price and all the home details. It also includes the terms you and the seller agreed to.
Proof of additional income
If you rely on additional income, such as alimony or child support, you will need to provide documentation on the amount and duration of these payments. In many cases, this will require a copy of the court order.
If you have a bankruptcy on your credit history, you will first need to talk with your lender about how long you need to wait before considering a mortgage. You will need to prove that all debts are discharged and no longer outstanding. In addition, if you had a previous foreclosure in your bankruptcy, you may have to wait seven years before you are eligible for a mortgage.
If you are divorced and pay or receive child support or alimony, your lender is likely to require a copy of your divorce decree to provide proof of income or liability.
As you can see by the checklist, the required documents and information associated with the home loan process can be overwhelming. At Hero Home Programs, our goal is to help everyone reach homeownership. We research all the available home loan products and discounts you may be eligible for and help walk you through the lending process.
To learn more about how we can help you get into the home of your dreams, contact us today.